The Stock Market Crash of 1929 

The market, the old timers say, is a forward looking animal.  That means it should start trending upward before the economy begins its recovery. 

But when will the economy begin its recovery…and how much will it stumble before it gets some good traction?  Your guess is as good as ours?

An old Marine told us the other night, “Prepare for the worst; it has yet to come.”

We liken losing money in the stock market to be the same as a root canal…we’d rather not suffer such pain.

In fact, we’d rather miss the first 20 percent of the uptrend versus losing 20 percent because we bought too early.  We consider it simple mathematics – if you lose 20 percent, you must then make 25 percent just to get back to even.

And if the worst is really yet to come for the economy – a statement we agree with – then how much more must the market fall to fully appreciate this?

The point is, stocks go up and then they go down.  So, too, they go down and then they go up.  But sometimes times they go down and then they go down some more.  For what’s absolutely the right time to buy at one time is spectacularly wrong at another.  And what’s spectacularly the wrong time to buy at one time is absolutely right at another.

From September 3, 1929 to November 13, 1929, the DOW lost 47.9 percent.  Then, as rarely noted, it rallied 48.1 percent through April 17, 1930…bringing good money, good optimism, and good people back to the market.  But alas, it was the bear trap of all bear traps…the market subsequently crashed 89.2 percent from its initial peak along with the hopes, dreams, and aspirations of a generation.

Caveat emptor – Let the buyer beware.

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